Although consolidation in the infra section of the industry has been on for a while, the hit will be worse now because of operators seeking to merge.Devina Sengupta | ET Bureau | April 18, 2017, 08:18 IST

MUMBAI: About 10% of the 60,000-plus people employed in telecom tower companies could lose jobs over the next year as rapid consolidation among telecom service providers hurts tenancies and revenue at the infrastructure firms.

Recruitment heads and industry executives whom ET spoke to said those in sales and marketing and corporate offices are on shaky ground in this part of the telecom industry. The consolidation in fact has forced recruiters to sharply reduce their hiring for the segment by up to 50%.

“Any consolidation will see overlapping workforce at varying levels that will eventually lead to workforce rationalisation,” said American Tower Company (ATC), one of the top players in the industry, in an email response to ET. ATC, post a majority acquisition in Viom in 2016, has about 58,000 towers in India.

The US-based tower company has limited its external hiring to plugging skill gaps wherever there is no internal talent available.

“Staffing is mostly focused on internal movement and redeployment with a view to utilising the existing workforce where possible.

Critical talent in view of the business priorities has been identified, and there are plans to retain them through challenging roles and development opportunities.”

It added that the telecom tower industry is likely to be under some pressure, in the short run, but in the long term it will lead to a stronger balance sheet for the industry.

Industry experts echoed the sentiment. Although consolidation in the infrastructure section of the industry has been on for a while, the hit will be worse now because of operators seeking to merge to protect financials.

“Once telecom operator consolidation goes through, there will be manpower rationalisation in the coming months. Downstream impact is expected to be significant, perhaps more than ever,” said Jaideep Ghosh, partner, management consulting, KPMG India.

According to analysts, the telecom tower industry in all employs 60,000-70,000, of which the majority are working on contract. A Ramachandran, partner at search firm EMA Partners, who has been recruiting for the telecom industry for several years, said the retrenchment could be around 10% of the total number of employees who work for the telecom tower sector. Recruiters said their hiring mandates have dropped sharply, a sign that firms are not replacing lost talent. “My hiring has gone down by 50% in the last two years,” said Kris Lakshmikanth, founder chairman of search firm Headhunters India.

Vivek Mehta, executive director, ABC Consultants, said that in the past year, he has seen a freeze in hiring by clients in the telecom tower industry. Earlier, he would recruit for them in the Rs 20-40 lakh middle-level bracket but that has stopped now. Ramachandran said he too has seen a drop of 35-40% in recruitment orders that came from tower firms. He, however, expects the industry to sail through these choppy waters once only two-three companies remain instead of a fragmented industry. He added that those who are in operations management and maintenance will be needed as companies continue to expand towards 4G.

In the last six months, Reliance Jio’s entry has sparked a consolidation wave in the telecom industry that is reeling under a debt of more than Rs 4.9 lakh crore. Idea and Vodafone are in the process of completing their merger and Reliance Communication hopes to emerge on a stronger financial footing after combining with Airtel and MTS. Bharti Airtel is buying out Telenor India. Besides this, operators want to sell their towers.

RCom last December said it will sell 51% of its tower business to Canada-based Brookfield Group for an all-cash deal of Rs 11,000 crore. This year, Bharti Airtel sold a 10.3 % stake in its telecom tower unit Bharti Infratel to US private equity firm KKR & Co. LP and Canada Pension Plan Investment Board for more $952.75 million. Vodafone and Idea are also looking for buyers for their own towers besides their respective stakes in India’s largest tower firm – Indus Towers.

Market leader Indus, which runs more than 122,000 towers, is co-owned by Bharti Infratel, Vodafone and Idea Cellular. Both Indus Towers and Bharti Infratel did not respond to ET’s queries. Industry body Towers and Infrastructure Providers Association (TAIPA), while accepting staff rationalisation is likely, said the impact of M&As is unlikely to be significant in the short term as the integration of such scale, size will take time to materialise.

In the long term, he added that the rollout of 5G, smart cities, high data demand and the Digital India push will lead to more tower site launches, better balance sheets and robust telecom infrastructure.

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“There will be a new brand identity — work has started on it,” a senior consultant working on the merged company’s new identity said, speaking on the condition of anonymity due to non-disclosure agreements.